how to evict an existing tenant - looking to purchase a 2 unit house

Question

Hi - Just joined BP. Excited about learning from you.

We (my husband and I) have been living in Montclair, NJ in a two family house for the last 10 years. We bought near the high, but tenant-wise we've had no problems. We are considering purchasing more properties. Currently we are looking at a 2 family short sale a few blocks away. It has tenants on month by month. Asking $335k, taxes about $10k. Has two 2br, 1ba apartments.

1st floor- tenant not cooperating and not allowing showings. Selling realtor says its really old and "needs work". Tenant has lived there for 10+ years. Her rental is way below market at $950, realtor says b/c landlord is not maintaining the property. Market rate would be about $1600-$2,000 depending on condition.

2nd floor is old and run down looking, but overall ok. 2nd floor has an enclosed porch that is supported on metal beams but looks like it needs to be totally fixed, peeling paint, torn screens, rotting floor boards. Paying $1200...market rate around $1600-$2,000 also.

We would need to evict the 1st floor tenant to renovate it and get market price rentals. Is it possible to evict a long-term tenant in NJ? How long and expensive would the process be?

This would be a buy and hold.

We're wafflers and have been scoping the market for many years. We have a real hard time making any sort of decisions so your input would be a great help.

Thanks for your help. :)

Craig Richardson · Answer

In most instances such as this my advice would be to just walk away. A difficult tenant with undervalue rent and the reno needed in what can only be assumed to be even more work on #1 than is already apparent on #2 just has too many unknowns to consider it a stable investment. Without seeing the first unit (a 10+ year tenant who won't show it raises a lot of red flags for me personally) you really don't know what you're getting into. But if you're really interested, one option would be to do a little research or sit down with a contractor and get a rough idea of the cost to renovate #2 well (no band-aids), then double it and add in value for things that might need fixing in #1 that you didn't do in #2 (i.e. if you gut the #2 kitchen assume you'll have to do the same in #1). After you get all the estimated reno costs, figure out what price you'd need to buy it at to receive positive cash flow and subtract out the reno costs. Then low ball off that number. The seller will probably reject the offer (maybe even get offended) but at least you put it out there and who knows, with a difficult tenant he might have trouble selling and you might be getting a call from him a month or two from now, at which point you can leverage your position even more.

Also, what @Aly W. said is worth noting. If they're not on a lease you can just give ample notice and start raising the rent. Done the right way, they may just decide to leave, and if they don't, you have every right to evict them.

I guess what I'm trying to say is that it seems a little sketchy, but that doesn't mean don't pursue it. Just approach it cautiously, make a really low offer to build in wiggle room, and base decisions on a willingness to walk away if it doesn't seem to be working. At least it could be a good learning experience even if it doesn't amount to anything.

Just remember, there are actions you can take without making commitments, but there are no commitments that can be made without taking action!

Also, what Aly NA said is worth noting. If they're not on a lease you can just give ample notice and start raising the rent. Done the right way, they may just decide to leave, and if they don't, you have every right to evict them.

I guess what I'm trying to say is that it seems a little sketchy, but that doesn't mean don't pursue it. Just approach it cautiously, make a really low offer to build in wiggle room, and base decisions on a willingness to walk away if it doesn't seem to be working. At least it could be a good learning experience even if it doesn't amount to anything.

Just remember, there are actions you can take without making commitments, but there are no commitments that can be made without taking action!

Marcia Maynard · Answer

@Tenzing Jangtey Welcome to Bigger Pockets!

Do the numbers work for you? Sounds like a high price for a fixer upper that you can't buy already empty. See if you can negotiate for the seller to either sell it unoccupied or else compensate you for the anticipated eviction costs. Good luck!

Tenzing Jangtey · Answer

@ Roy N. thanks for the info

@Aly L- thanks for your response...the house comes with the tenants. The current owner will not deliver vacant, which leads me to think that the 1st floor tenant might be difficult to evict.

Aly W. · Answer

Does that 1st floor tenant have a lease? If not, you can raise the rent with proper notice - within rent control laws if there are any - and continue to raise it until they decide to move. Cheaper than an eviction. If they agree to a higher rent, no need to evict or renovate.

If they do have a lease, and are paying rent and not destroying property, raise the rent when it expires. Since you don't own the property right now, it's the current owner's issue to deal with delivering the property vacant upon closing or arranging access to show the place, depending on what their lease says.

Before considering eviction, talk to an attorney that specializes in landlord/tenant law and see what your options are before you go down this road.

Roy N. · Answer

@Tenzing Jangtey

The following was taken from "Tenant's Rights in New Jersey" page 50:

how to evict an existing tenant - looking to purchase a 2 unit house

how to evict an existing tenant - looking to purchase a 2 unit house

Most Popular Reply

5 Replies